Maruti targets MPV segment with Ertiga

Maruti Suzuki India (MSIL) finally revealed its Ertiga multi-purpose vehicle (MPV) with a global premiere at the Expo and also showcased its Concept XA Alpha compact SUV. Expected to be competitively priced at around Rs 5.7 lakh for the petrol and Rs 8 lakh for diesel, the Ertiga was quite a show stealer. Ertiga sales will kick off from end-March or early April, according to Shinzo Nakanishi, MD and CEO. Positioned as a category creator, the Ertiga is a seven-seater with the focus being on three rows of seats, space, compactness and convenience. Versatility in seating will facilitate reconfiguration of the seats to free up luggage space by folding the last row and also individual seats in the middle row.

Based on the extended Swift platform, the Ertiga maintains the Maruti family look with the front resembling the Ritz hatchback. Since its overall length is 4265mm, it does not qualify for excise benefits available to sub four-metre cars.

Initially codenamed RIII as a concept model at Auto Expo 2010, the Ertiga underwent further development in Japan to make it production-ready. According to I V Rao, managing executive officer (engineering), the Ertiga will not compete with existing MPVs and will be 25 percent lighter. Though the car draws a lot of similarities with the Toyota Innova, Rao feels the new Innova has undergone only cosmetic changes and will not really compete with or dent Ertiga sales. Maruti will debut the new K14B petrol engine from its K-series on the Ertiga. Also on offer will be the 89bhp, 1.3-litre DDiS diesel engine harnessed in the SX4.

“India is earmarked to be the largest global automobile market by 2020 and Maruti Suzuki’s entry in the MPV segment will strengthen its leadership position. The Ertiga showcases the huge R&D skills of Maruti and Suzuki engineers,” Nakanishi pointed out at the launch. Moreover, the MPV will enable the carmaker to be well represented in a growing category that currently constitutes around 14 to 15 percent of the total passenger vehicle segment and where it has been conspicuous by its absence.

Meanwhile, Maruti has been exploring the setting up of a new diesel engine plant that, according to Nakanishi, will involve an investment of Rs 1,000 crore for powering 100,000 vehicles but in the absence of any clear long-term government policy on diesel, the decision on the plant has been hanging fire. Sourcing new diesel engines from Fiat is expected to be finalised by next month with pricing continuing to be an issue. “We are talking to them but have not yet come to an agreement. We need more time,” says Nakanishi while admitting that Fiat has the capacity to supply 5,000 engines per month albeit MSIL requires as much as possible.

XA Alpha wows

For Suzuki, India continues to be an important market and it plans to bring all new technologies for the development of future compact cars. One of such models is the XA Alpha SUV concept that elicited a good public response, according to company officials. Maruti will now undertake a feasibility study on its production viability.

The XA Alpha, which has been designed by Indian and Japanese engineers together and draws inspiration from Indian martial arts, has been positioned as an off-roader, the ‘X’ denoting the crossover category and ‘A’ as a first step for customers keen to enter the UV segment.

Built on the new Swift platform, the five-seater is 4000mm long and, unlike the longer Ertiga, qualifies for lower excise duty. The car is likely to be equipped with the K-Series petrol engine and the 1.3-litre DDiS diesel motor. Maruti has also confirmed that a four-wheel-drive version would also be available.

Fresh outlook

Going forward, Maruti is keen to sell what it produces profitably. 2011 was a tough year but with production problems out of the way, it is moving back to normalcy. Mayank Pareek, managing executive officer (sales and marketing), attributes the slowdown in passenger car sales to inflation, high interest rates and fuel price hikes. But with food inflation brought under control and despite fuel prices still reigning high, he is optimistic 2012 will be a better year for MSIL.

However, sales are expected to be lower this fiscal compared to 2010-11. MSIL lost about 100,000 units in FY’12 due to labour unrest between June and October. The company is now targeting sales of 125,000 units in the overseas markets against 147,000 units in FY’11. Its market share is also down, at around 40 percent; it had maintained over 44.4 percent share over the last 10 years.

While Maruti had announced plans to set up a new plant in Gujarat recently, it will consider that, along with further investments and capacity expansion when it notches sales of 1.8 million units. It had also been experiencing supply chain problems with component imports in the wake of natural disasters in Japan. At present, 95 percent of Maruti’s components are sourced from local suppliers, and five percent are imports from Japan and other countries. “A volume of 20 to 25 percent of the total models have been impacted because of the imports,” reveals Nakanishi.